ISSUE The Newsletter of National Spot Exchange Limited (NSEL) 04 JUNE 2016 - Y NSEL NEWS MA
C O N T E N T S From the CEO’s Desk
Page - 02-03 Dear Esteemed Stakeholders and Readers, INFOCUS Welcome to the fourth issue of our newsletter - NSEL NEWS. We believe that it RECOVERY UPDATE is our prime duty to keep you updated on the progress of recovery and ongoing litigation against the defaulters and the relentless efforts put by our recovery and legal team in this regard. We continue with our journey with full commitment towards making recovery from the defaulters by following the due course of law. Page - 04 On 29th April 2016, Shri Arun Jaitley, Union Minister of Finance and Corporate SNAPSHOT - RECOVERY Affairs, said in a written reply to Lok Sabha question “The Centre has directed market regulator SEBI to "examine" and "take necessary action" against defaulting brokers in the Rs. 5,574 crore NSEL scam. Also, the Special Team of Secretaries at their regular review meeting highlighted the SEBI action on brokers and asked to expedite the necessary action under law. Followed by the Hon’ble High Court Committee which had recommended audit of leading Page - 05 brokerage firms in its interim report no. 7, SEBI has also initiated much awaited action on brokers by appointing auditors for audit of five brokerage houses SNAPSHOT - LITIGATIONS with respect to a slew of complaints received against them from their trading clients. As per news reports, a Delhi-based businessman Vishvanidhi Dalmia, has filed a recovery suit in the Bombay High Court against his brokerage firm India Infoline Ltd and its four officials including Chairman Nirmal Jain. We shall not Page - 06 be surprised if more such complaints and actions are taken by the trading clients against their brokers in the coming days, in view of the large scale DEFAULTERS WHO HAVE alleged malpractices indulged into by the brokers. TO RETURN MONEY We urge all of you to join the sustained battle against the defaulters. With your cooperation and assistance, NSEL will be able to devise an effective strategy for speedy recovery from the defaulters. We once again urge the victims not to allow themselves to be used by the unholy designs and vested interests who Page - 07 are running a covert agenda of demolishing NSEL and its promoter. NSEL NEWS is a platform for all of us to stay connected with regular updates NEWS HIGHLIGHTS and for a joint action against defaulters for recovery. We would be eager to have your feedback and suggestions about the newsletter. Do write to us on [email protected]
Best Regards
If you have any information about DEFAULTERS (Their whereabouts, New Business Ventures, Financial Dealings...) Prakash Chaturvedi SHARE WITH US! Chief Executive Officer Write to us on National Spot Exchange Ltd. (NSEL) [email protected]
For private circulation only INFOCUS RECOVERY UPDATE
THE NSEL RECOVERY UPDATE • NSEL has already secured recoveries amounting to Rs. 1233.02 Crore by way of decree on admission against 5 defaulters and through injunctions from a total of 18 defaulters with outstanding of Rs. 4515.93 Crore. • The Economic Offences Wing (EOW), Mumbai Police has attached assets worth around Rs. 5000 Crore of defaulting trading members. • The Enforcement Directorate (ED) has attached assets worth around Rs. 800 Crore of the defaulting trading members. • It is pertinent to note that out of 24 defaulting trading members 2 trading members with original outstanding of Rs. 195.75 Crore have almost cleared their dues. • NSEL has disbursed amount of Rs. 542.99 Crore to trading brokers, which includes a without prejudice loan from Financial Technologies India Limited (FTIL) to be paid to the smaller trading clients. • NSEL has settled the e-Series contracts outstanding upto 98.48 % by disbursing Rs. 298.52 Crore to the approx. 40000 e-Series unit holders directly to their bank accounts. • NSEL has additionally recovered Rs 34.98 Crore as available in its escrow account/ Competent Authority/ Court for distribution after order from High Court Committee (HCC). • There is an additional amount of Rs.10 Crores paid by N K Proteins in the MPID Court as security for granting bail to Mr. Nimish Patel. NSEL has made an application in MPID Court to transfer this amount to NSEL escrow account. • So total amount available for distribution is Rs. 44.98 Crore and would be disbursed to the genuine trading clients after relevant orders.
RECOVERY ACTIONS AGAINST DEFAULTERS Based on relentless single-handed recovery efforts by NSEL from the defaulters: Mohan India: The Hon’ble Special MPID Court had directed the sale of properties of Mohan India Group namely Delhi Civil Lines and Bikaner Land. The Court has appointed Knight Frank India as a global consultant to bring in quality buyers. As per MPID directions Competent Authority has republished the sale notice on 8th June 2016 with certain modified terms and conditions. Aastha Alloys: The Hon’ble Bombay High Court on 03/02/16 has directed the defaulter Aastha Group to deposit Rs. 157.50 Crore subject to any already deposited amount, within four weeks against their admission of liability. The appeal filed by Aastha Group against the Order of decree on admission passed by the Single Judge was dismissed by the Hon’ble Bombay High Court. Also the Hon’ble Special MPID Court has directed the Competent Authority for sale of shares in Mohit Agarwal and Shilpa Agarwal’s Demat accounts of Aastha Group. Swastik Overseas: The Hon’ble Special MPID Court had ordered the Competent Authority to begin the auction procedure for residential & commercial properties of Swastik Overseas Corporation in Ahmedabad. Accordingly, the Competent Authority has issued a public notice for sale of the properties of Swastik Overseas Corporation on 8th June 2016. Also Bharat Bio Gas (debtor of Swastik Overseas) has given proposal to repay Rs 1.89 Crs in High Court Committee. ARK Imports: The Hon’ble MPID Court has directed the Competent Authority to fetch the valuation and proceed with sale of ARK Import’s 11 properties.
Page 02 NSEL NEWS | May-June 2016 www.nationalspotexchange.com INFOCUS RECOVERY UPDATE
Shree Radhey Trading: Ramesh Nagpal of Shree Radhey Trading has been arrested by EOW and was granted bail by MPID Court on the conditions of him making FDR of Rs. 29 Lakh in Competent Authority's account within 10 days, and depositing Rs. 25 Lakh every quarterly in Competent Authority’s account. Further the Hon’ble Special MPID Court has ordered the Competent Authority to begin the auction procedure for red chilly and black pepper of Shree Radhey Trading in Saharanpur. Accordingly, the Competent Authority has issued a public notice for sale of red chilly and black pepper of Shree Radhey Trading. Metkore Alloys and Industries: The Hon’ble Special MPID Court has ordered the Competent Authority to begin the auction procedure for ferrochrome of Metkore Alloys and Industries in Tekkali. As per directions from the Hon’ble Special MPID Court, the Competent Authority has issued a public notice for sale of ferrochrome. Further, -the Hon’ble Special MPID Court has directed the SBI to proceed with the sale of the properties of Metkore Alloys which were pending for sale, only after complete intimation to the Competent Authority. The sale proceeds were directed to be deposited in a no lien interest bearing A/c with intimation of the auction and sale proceeds and action of the SBI in respect of the same to the Competent Authority. Yathuri Associates: The Hob’ble HCC has recommended that the Competent Authority to sell approx. 863 bags of sugar of Yathuri Associates. By Order dated March 10, 2016, Hon’ble Bombay High Court has accepted the recommendation of the Hon’ble HCC. NCS Sugars: The Hon’ble Special MPID Court has ordered the Competent Authority to begin the auction procedure for the residential & commercial properties of NCS Sugars Pvt. Ltd. Lotus Refineries: As per MPID Court directions Competent Authority has transferred Rs 16.10 crs from the attached bank accounts of Lotus Refineries to the Competent Authorities bank account Bank Account of Defaulters: Hon’ble Special MPID Court has directed the Competent Authority to transfer the amounts from the attached bank accounts of the following defaulters to the Competent Authority’s Bank account - Aastha Minmet, Juggernaut Projects, Yathuri Associates, Metkore Alloys, MSR Foods, ARK Imports, Shree Radhey Trading, Swastik Overseas, Mohan India, Tavishi Enterprises, NCS Sugars, and Lotus Refineries
Violation of bail condition by defaulters as on 31.05.16 Amount Amount Shortfall Bail order payable as per paid till in bail Defaulter date bail condition 30.05.16 condition Remarks Rajesh Mehta 09-07-14 75 crs 2.64 crs 72.36 crs Cancellation of Bail Application Swatik Overseas is pending in MPID Court. Gagan Suri 10-11-14 271 crs 6 crs 265 crs Cancellation of Bail Application Yathuri Associates is pending in MPID Court. Shilpa Agarwal 12-08-14 11 crs 1.02 crs* + 9.49 crs Cancellation of Bail Application Aastha Minmet 0.49 crs is pending in MPID Court. TMT auction** 1.51 crs 2.80 crs Nageshwara Rao 11-09-14 11 crs 24 lacs 8.20 crs Cancellation of Bail Application NCS Sugars is pending in MPID Court. Ranjeev Agarwal 10-11-14 36 lacs 12 lacs Cancellation of Bail Application Primezone / is pending in MPID Court. PD Agroprocessor * Paid by: Aastha 0.75 crs; Debtors- Shree Venkateshwara Rs 6,32,407, Bagalkot Cement Rs 9,00,699, Rayen Steel Rs 12,00,000 ** TMT auction amount is with CA
Page www.nationalspotexchange.com NSEL NEWS | May-June 2016 03 SNAPSHOT-RECOVERY
Amount in Rs. Crore Sr. Group Name of defaulter Original Amt Amt Recovered Amt Assets Assets Arrests No. Outstanding Recovered & in Escrow Outstanding Attached / Attached by made by Disbursed Account / Secured by ED EOW CA / Court EOW 1 ARK IMPORTS PVT LTD 719.42 0.05 0.57## 719.20 638.79 2 Dunar P D AGROPROCESSORS PVT 687.30 13.21 0.24 673.85 1187.77 54.76 Foods LTD Limited Group 3 Naraingarh YATHURI ASSOCIATES 424.64 19.04 6.00 399.60 418.56 95.11 Sugar Group 4 Aastha JUGGERNAUT PROJECTS LTD. 220.20 1.00 0.00 219.20 167.73 48.89 Group AASTHA MINMET INDIA PVT 26.47 3.52 1.01*** 22.43 LTD 5 METKORE ALLOYS & 114.28 19.20 0.25 94.83 102.44 - INDUSRIES LTD. 6 SWASTIK OVERSEAS 102.98 9.84 2.34 90.80 41.31 1.67 CORPORATION 7 WHITE WATER FOODS PVT LTD 86.12 1.30 0.00 84.82 163.00 42.46 8 Namdhari NAMDHARI FOOD 53.07 2.05 1.48** 51.02 23.00 23.65 Group INTERNATIONAL PVT LTD NAMDHARI RICE & GENERAL 10.75 0.36 0.00 10.39 - MILLS 9 SHREE RADHEY TRADING CO 35.34 0.75 0.11 34.48 30.50 - 10 VIMLADEVI AGROTECH 14.02 0.08 0.00 13.94 21.81 - LIMITED 11 MSR FOOD PROCESSING 10.05 1.23 0.10 8.82 8.00 - 12 N.K. N K PROTEINS LTD 969.89 31.59 3.85 934.45 771.95 313.82 Industries Group 13 Mohan MOHAN INDIA PVT LTD 600.08 54.70 0.00 545.38 602.32 183.30 India Group TAVISHI ENTERPRISES PVT. LTD. 333.01 0.00 0.00 333.01 14 Lakshmi LOIL CONTINENTAL FOOD LTD 356.21 8.50 0.00 347.71 - Energy & LOIL HEALTH FOODS LTD 294.48 7.00 0.00 287.48 - Foods Group LOIL OVERSEAS FOODS LTD 86.19 1.08 0.00 85.11 746.63 - 15 LOTUS REFINERIES PVT LTD 252.56 0.08 16.10** 252.48 115.62 17.99 16 NCS SUGARS LIMITED 58.85 6.65 1.30 50.90 168.75 - 17 SPIN COT TEXTILES PVT LTD 38.26 0.00 1.63 36.63 89.01 83.72 Total 5494.19 363.71* 34.98 5296.54# 5297.19 865.37
* This includes, Rs. 182.48 Crore which was received as settlement amount from two members who cleared their liability. In addition, Rs.179.27 Crore was paid by NSEL to its members towards remittances to the smaller Trading Clients by taking a without prejudice loan from FTIL. ** The amount is with Competent Authority *** Out of this amount, Rs 0.52 Crore is in Escrow Account and Rs 0.49 Crore is with the CA ## Out of this amount, Rs 0.17 Crore is in Escrow Account and Rs 0.40 Crore is with the CA # Amount deposited in CA is not deducted in the total liabilities of the member
The readers may note that it has come to our notice, that there have been dealings made by some trading clients directly with some of their known defaulters by way of agreements not disclosed to any of the regulators or to the exchange or to the HCC. Some of the recipients of the recovery amount are directly related to the leading luminaries championing the cause of trading clients.
Page 04 NSEL NEWS | May-June 2016 www.nationalspotexchange.com SNAPSHOT-LITIGATIONS
Amount in Rs. Crore Sr. No. Group Name of defaulter 138 MPID HCC BHC Outside Remark Injuction Decree Bombay obtained Obtained 1 ARK IMPORTS PVT LTD As per MPID order dated 02.04.2016 inspection and auction 719.42 719.4 of raw wool at Seerah and Purba godown was conducted and sold to the highest bidder for a sum of 40 lakhs 2 Dunar Foods Ltd. P D AGROPROCESSORS PVT LTD MA filed seeking direction to the bank for deposit of 680.23 - Group amount paid for loan repayment by PD Agroprocessors 3 Naraingarh Sugar YATHURI ASSOCIATES MA filed to seek attachment of the pending 405.6 265 Group properties (14 immovable properties and 3 vehicles). 4 Aastha Group JUGGERNAUT PROJECTS LTD. MPID court has directed CA for sale of shares in Mohit 219.2 145 and Shilpa Aggarwal's Demat Accounts. AASTHA MINMET INDIA PVT LTD MA filed for transferring the amounts in the Bank 23 12.5 accounts Aastha to NSEL Escrow A/c and for sale of properties. 5 METKORE ALLOYS & INDUSRIES LTD. As per direction of MPID Court SBI through its letter, 94.83 - informed CA that they have completed sale of two properties. The sale proceeds to be deposited in a no lien interest bearing A/c. 6 SWASTIK OVERSEAS CORPORATION MA filed in MPID Court seeking direction to accept the 93.44 91.2 offer received for purchase of two residential properties of Swastik Group 7 WHITE WATER FOODS PVT LTD Attached 2 bank accounts made absolute vide MPID 86.12 - order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal. 8 Namdhari Group NAMDHARI FOOD INTERNATIONAL Vide HC Order dated 10.03.2016, CA to transfer Rs. 53.07 - PVT LTD 47,47,500/- from sale of paddy stock from CA's Account to NSEL Escrow Account. NAMDHARI RICE & GENERAL MILLS MA filed to direct the CA to initiate the auction sale 10.75 - procedure 9 SHREE RADHEY TRADING CO Attached 3 bank accounts made absolute vide MPID 34.59 - Order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal. 10 VIMLADEVI AGROTECH LIMITED MA filed to direct the CA to initiate the auction sale 14.02 - procedure 11 MSR FOOD PROCESSING MA filed seeking sale of properties offered by 8.82 - Ravindra Reddy on behalf of Sampat Rao towards part payment of the liability 12 N.K. Industries Group N K PROTEINS LTD MA filed seeking transfer of 10 Cr from registry of 937.89 - sessions court to NSEL Escrow Account. 13 Mohan India Group MOHAN INDIA PVT LTD CA has reissued the auction sale notice for Mohan 1,037.84 - India’s Delhi & Bikaner properties and bids are invited till 12.08.16. TAVISHI ENTERPRISES PVT. LTD. MPID court directed CA to place boards at Mohan - Group's properties. CA issued letter to NSEL to place the boards. 14 Lakshmi Energy & LOIL CONTINENTAL FOOD LTD MA filed in MPID Court seeking attachment of - Foods Group pending properties of the LOIL Group of Companies. LOIL HEALTH FOODS LTD MA filed in MPID Court seeking attachment of - pending properties of the LOIL Group of Companies. LOIL OVERSEAS FOODS LTD MA filed in MPID Court seeking attachment of - pending properties of the LOIL Group of Companies. 15 LOTUS REFINERIES PVT LTD 16 crores from the attached bank accounts has been - transferred to CA's account on 12.05.2016 and placed in FDR, as per MPID Court direction. 16 NCS SUGARS LIMITED Attached 2 Bank accounts made absolute vide MPID 58.85 - Order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal. 17 SPIN COT TEXTILES PVT LTD Arbitration proceeding is initiated. Statement of Claim 38.26 - filed by NSEL. Total 4515.93 1233.02
Page www.nationalspotexchange.com NSEL NEWS | May-June 2016 05 DEFAULTERS WHO HAVE TO RETURN MONEY
DEFAULTER OVERVIEW
YATHURI ASSOCIATES Yathuri Associates is in the sugar business and closely related to Naraingarh Sugar Mills at Haryana. Member had commenced trading in Sugar Ex Ambala, Haryana. To develop the sugar business further in terms of processing by products such as molasses, bagasse member had planned to set up a new distillery unit with a bottling plant for alcoholic beverages. They have also tied up with an international brand as a franchisee to Gagan Suri bottle their products.
DETAILS OF LITIGATIONS
Original Outstanding High Court Proceedings Injunction was granted in favour of NSEL for a sum of Rs. 424.64 Cr Rs. 405.60 crores vide Order dated 01.10.2014 and a decree was granted in favour of NSEL vide order dated 18.12.2014 for an amount of Rs. 264.96 crores. Report No. 1 of the High Court Committee was accepted wherein related parties / sister concerns of Yathuri Associates was directed to deposit the amounts. Mr. Sanjeev Bhasin was directed to appear before the High Received till 20/06/2016 Court Committee and provide the required documents and addresses of 23 related companies mentioned in Rs. 25.04 Cr the said Report. High Court Committee Proceedings 863 bags of sugar are lying in the warehouse of Yathuri. However HCC had directed Competent Authority to conduct the auction sale of Sugar Stock. MPID Proceedings Balance Receivable NSEL has filed MA bearing No. 194 of 2016 in MPID Court seeking attachment of the pending properties (14 immovable properties and 3 vehicles) of Yathuri Rs. 399.60 Cr Associates. Properties for Attachment A total of 26 properties belonging to Yathuri Group have been identified, and attached.
Page 06 NSEL NEWS | May-June 2016 www.nationalspotexchange.com NEWS HIGHLIGHTS
29 April, 2016 - Business Standard 10 May, 2016 - Business Standard Sebi to act against defaulting brokers in NSEL scam NSEL scam: an investor files recovery suit against Sebi has been asked to take necessary action against the India Infoline defaulting brokers in the nearly Rs 5,600-crore NSEL scam A Delhi-based businessman Vishvanidhi Dalmia has filed a while the Corporate Affairs Ministry and other agencies recovery suit on Friday in the Bombay High Court against including the Enforcement Directorate are also brokerage India Infoline Ltd and its four officials including investigating the case, the government said today. chairman Nirmal Jain following delay in recovery of money Union Minister Arun Jaitley today told Lok Sabha that invested in scam hit National Spot Exchange Ltd (NSEL). other than Corporate Affairs Ministry, the Economic With a business interest in real estate, exports of garments Offences Wing (EOW) of Mumbai police and the and investment in securities markets instruments, Dalmia Directorate of Enforcement (ED) are also investigating the has filed the suit for recovery of Rs 11.38 crore including matter. "Properties valued at Rs 5,757 crore an actual investment sum of Rs 7.60 crore and interest at (approximately) of the accused have been attached by 18 per cent to the tune of Rs 3.78 crore. EOW while 32 common properties valued at Rs 740 crore (by ED) and Rs 1,222.89 crore (by EOW) have been attached. 7 June, 2016 - Business Standard "Further, directions have also been given to the Securities Brokerages face sebi fire in nsel scam and Exchange Board of India to examine and take The Securities and Exchange Board of India (Sebi) has necessary action against the defaulting brokers," he said recommended a forensic audit of brokerage houses in a written reply. whose clients’ significant amounts of money in the Rs. 5,574 crore National Spot Exchange Ltd. (NSEL) scam. The regulator has indicated this to third-party auditors looking 6, May, 2016 - Business Standard at the books of these brokers. Sebi had on April 4 given NSEL Scam: MPID court orders fund transfer from these brokerages 60 days’ time to have their books vetted Lotus Refineries' account by third-party auditors. The brokerages include Anand The Maharashtra Protection of Interest of Depositors Rathi Commodities, India Infoline Commodities, Geofin (MPID) court has ordered transfer of Rs 12.74 crore from Comtrade, Phillip Commodities and Motilal Oswal 27 bank accounts of Lotus Refineries Pvt Ltd. The court Commodities. has directed the Economic Offences Wing (EOW) of the NSEL spokesperson commented saying that “We are Mumbai Police to ensure the transfer of funds efficiently. happy that Sebi has finally initiated an audit against Having defaulted for the amount of Rs 252.48 crore, Arun brokers, which was not done by former Forward Markets Kumar Sharma, director of Lotus Refineries was arrested Commission Chairman Ramesh Abhishek, despite having on November 11, 2013 and was released on bail after wide powers. In fact, the Economic Offences Wing could three months. major crime by brokers”. This year on March 4, MPID court had also attached 37 properties of ARK Imports Pvt. Ltd. and has directed the 17 June, 2016 - Business Standard competent authority to fetch the market valuation of the property and file draft sale proposal. Also, the court Chidambaram mastermind behind NSEL scam rejected the application of Nimish Patel, chairman of N K Attacking sharply on former finance minister of the United Proteins Ltd, NSEL's largest defaulter of Rs 934.45 crore Progessive Alliance government P Chidambaram and his seeking his travel to the United States between May 3 son Karti Chidambaram, the Bharatiya Janata Party's Rajya and June 21. Patel's application was rejected on the Sabha MP Subramanian Swamy said that the father and suspicion raised by investigating agency of potential son duo are masterminds behind scam at National Spot absconding of the defaulter. Exchange (NSEL). NSEL had faced an Rs 5,600 crore payment crisis in July 2013 which led to its promoter Financial Techologies (India) exit the exchange business.
Page www.nationalspotexchange.com NSEL NEWS | May-June 2016 07 NSEL Trading Clients NSEL requests you to beware of some of the miscreants who have entered into backdoor arrangements with defaulters to settle their own amounts, Beware!!! which had to be deposited in the escrow account for distribution to all. This action was a violation of the High Court order. If you are aware of any such trading clients who have entered into similar malicious deals with the defaulters or planning the same, please bring it to our notice at email: [email protected]
Trading Clients are requested to beware of bogus twitter handles that have strategized to derail the recovery process by shifting attention away from defaulters and attacking the investigative agencies.
You are requested to send your email Ids with contact Suggestions / feedback on the NSEL recovery efforts to number along with your Client code, Member Id be mailed to us at email: for receiving regular updates on Recovery at email: [email protected] [email protected]
National Spot Exchange Limited Regd. Off.: 601, Chintamani Plaza, 6th floor, Chakala, Andheri Kurla Road, Andheri (East), Mumbai - 400099. Tel: +91-22-6761 9900 | Fax: +91-22-6761 9931 | www.nationalspotexchange.com Disclaimer: The purpose of this newsletter is to provide current status to all stakeholders. The contents of the newsletter do not necessarily reflect the views or policies of NSEL and therefore, NSEL is not responsible for and specifically disclaims any liability arising out of damages of any kind arising out of the use or reliance on this information. Links or reference to other websites if any does not constitute endorsement of the material on those sites or any association with the same.